Volume 2.2 - Discrimination - Spring 1998

Title: The Rent/Commuting Tradeoffs of Black Middle-Class Households in Large Metropolitan Housing Markets

Author: Mark Shroder

Abstract: Researchers in this decade have documented widespread discrimination against minority home seekers in the United States. The persistence of housing discrimination is a fact, but the effects of housing discrimination are uncertain. This paper investigates whether there is a causal relationship between discrimination and the racial segregation displayed by most large metropolitan areas. If members of the black middle class who could afford the rents in white neighborhoods tend to reside in segregated neighborhoods, is this behavior largely voluntary-given the significant premiums white consumers pay to avoid black neighborhoods-or largely imposed on them?

Economic theory predicts that a consumer facing only normal market constraints will trade off the time value of commuting against locational rents based on commuting distance. The violation of the marginal condition predicted by the theory should be a marker for the presence of an abnormal constraint. I look at rents and commutes of middle-class renters, both white and black, in nine major metropolitan areas and find clear evidence of constraint in only one (Boston).

About the Author: : Mark Shroder is an economist with the Office of Policy Development and Research at the U.S. Department of Housing and Urban Development. He received master's and doctoral degrees in economics from the University of Wisconsin at Madison.

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